TransCanada Pipeline Safety Needs To Be Better: NEB Audit

CALGARY - A National Energy Board audit has found room for improvement when it comes to TransCanada Corp.'s (TSX:TRP) pipeline safety practices.

Although the federal energy watchdog is "of the view that the processes presently used by TransCanada have identified the majority, and most significant, of its hazards and risks," it says the company is still breaking the rules in some areas.

The NEB had scheduled an audit on TransCanada's integrity management programs to begin last spring, but decided to move on it sooner after a then-employee of TransCanada came forward with allegations of safety lapses. The audit took place between November 2012 and August 2013.

"The audit has confirmed that, in response to these allegations, TransCanada has developed and implemented a program of actions with the goal of correcting and preventing similar occurrences," the NEB said.

"The board notes that a number of the allegations of regulatory non-compliance were identified and addressed by TransCanada only after the complainant's allegations were made and were not proactively identified by the company's management system."

According to the report released by the NEB on Monday, the audit found the Calgary-based pipeline operator was meeting all legal requirements in five of nine aspects of the review.

But there are four other areas in which the company was found to be non-compliant:

— hazard identification, risk assessment and control

— operational control in upset or abnormal operating condition

— inspection, measurement and monitoring

— management review.

In a news release, the NEB said a finding of non-compliance does not necessarily mean there's an immediate safety hazard.

TransCanada must file a corrective action plan to the NEB within 30 days detailing how it intends to fix the problems. TransCanada spokesman Shawn Howard said the company has taken action on a number of fronts.

For instance, it's improving inspections on its NGTL natural gas system in Western Canada and its monitoring of commodities carrying dangerous hydrogen sulphide gas. It has also appointed an executive to oversee its management systems and meeting of regulatory obligations.

"The findings from this review will be included in a program of improvements, many of which we have already underway, that we are committed to as part of our ongoing efforts to ensure our pipeline safety management system is as effective as it can be," Howard said.

The report comes as TransCanada awaits a U.S. decision on its controversial Keystone XL pipeline, which would connect 830,000 barrels per day of mostly oilsands crude to U.S. Gulf Coast refiners. That $5.4-billion project would expand an existing system that started delivering crude to the U.S. Midwest in 2010.

In its report, the NEB said it's looking into certain steel pipe and fittings on the existing Keystone system "with the potential to exhibit lower than specified yield strength."

"This investigation remains ongoing. Resolution of the investigation and any required remedial actions will be determined outside the audit."